[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.601-1]

[Page 391-392]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.601-1  Special deduction for bank affiliates.

    (a) The special deduction described in section 601 is allowed:
    (1) To a holding company affiliate of a bank, as defined in section 
2 of the Banking Act of 1933 (12 U.S.C. 221a), which holding company 
affiliate holds, at the end of the taxable year, a general voting permit 
granted by the Board of Governors of the Federal Reserve System.
    (2) In the amount of the earnings or profits of such holding company 
affiliate which, in compliance with section 5144 of the Revised Statutes 
(12 U.S.C. 61), has been devoted by it during the taxable year to the 
acquisition of readily marketable assets other than bank stock.
    (3) Upon certification by the Board of Governors of the Federal 
Reserve System to the Commissioner that such an amount of the earnings 
or profits has been so devoted by such affiliate during the taxable 
year.

No deduction is allowable under section 601 for the amount of readily 
marketable assets in excess of what is required by section 5144 of the 
Revised

[[Page 392]]

Statutes (12 U.S.C. 61) to be acquired by such affiliate, or in excess 
of the taxable income for the taxable year computed without regard to 
the special deductions for corporations provided in part VIII (section 
241 and following), subchapter B, chapter 1 of the Code. Nor may the 
aggregate of the deductions allowable under section 601 and the credits 
allowable under the corresponding provision of any prior income tax law 
for all taxable years exceed the amount required to be devoted under 
such section 5144 to the acquisition of readily marketable assets other 
than bank stock.
    (b) Every taxpayer claiming a deduction provided for in section 601 
shall attach to its return a supplementary statement setting forth all 
the facts and information upon which the claim is predicated, including 
such facts and information as the Board of Governors of the Federal 
Reserve System may prescribe as necessary to enable it, upon the request 
of the Commissioner subsequent to the filing of the return, to certify 
to the Commissioner the amount of earnings or profits devoted to the 
acquisition of such readily marketable assets. A certified copy of such 
supplementary statement shall be forwarded by the taxpayer to the Board 
of Governors at the time of the filing of the return. The holding 
company affiliate shall also furnish the Board of Governors such further 
information as the Board shall require. For the requirements with 
respect to the amount of such readily marketable assets which must be 
acquired and maintained by a holding company affiliate to which a voting 
permit has been granted, see section 5144(b) and (c) of the Revised 
Statutes (12 U.S.C. 61).

                      NATURAL RESOURCES

                               Deductions